From the Chamber of Deputies

On 2 September 2011, the Chamber of Deputes approved in its third reading an amendment to the VAT Act. The amendment will now be discussed by the Senate.

In addition to the changes in VAT rates which we informed you about in Tax News No. 6/2011, further changes were adopted by proposed amendments. We consider the most important changes to be the expansion of the liability for unpaid tax, the change of the regulation concerning collective corrective tax documents, and the regulation concerning the Specialized Financial Office pursuant to the Act on Territorial Financial Authorities, all of which have been introduced by the amendment to the VAT Act.

Liability for unpaid tax

The recipient of a taxable supply is now also liable for the unpaid tax in the event the consideration for the received supply has been provided to the supplier (payer) by an interbank transfer to the account administered by a payment services provider outside the Czech Republic. This regulation, however, does not apply to situations where the recipient of the supply is obliged to assess the tax.

Collective corrective tax document

The changes concerning collective corrective tax documents mostly apply to the particulars of such documents. Instead of individual registration numbers on corrected tax documents, the amendment allows such documents to be specified in such a manner that the original supply can be identified unambiguously. The amendment allows the taxpayer to state the difference between the corrected and the original tax base and the corrected and the original tax as a collective amount. In the event that the original supply was provided in a foreign currency, a unified exchange rate can be used, i.e. the exchange rate of the Czech National Bank applicable on the first business day of the relevant calendar year.

Specialized Financial Office

The regulation of the Specialized Financial Office is included in the Act on Territorial Financial Authorities. All changes in this area are in compliance with the reorganization of the tax administration (Financial Administration as of 2012).

The Specialized Financial Authority has its registered office in Prague and the authority is competent only for selected entities. The amendment to the act considers the following to be selected entities:

• legal entities established for the purposes of doing business, whose turnover exceeds CZK 2 billion;
• savings- and loan-providing cooperatives;
• banks, insurers, reinsurers and foreign branches thereof; and
• group members pursuant to the VAT Act, provided at least one group member is a selected entity.